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SOCIAL EVENTS
On Saturday afternoon a number of the members
took part in a Golf Competition organised by the
Solicitors' Golf Society.
On Saturday evening members and their wives
were guests of the Donegal Solicitors' Association
for a cocktail party after which there was a Dinner
Dance. Over 200 members attended the Dinner
Dance. Among the guests present were His Honour
Judge Ryan, the President of Law Society of England
and Mrs. Lawson, the Vice-President of the Law
Society of England and Mrs. Long, the President
of the Law Society of Scotland and Mrs. Watson,
and the President of the Incorporated Law Society
of Northern Ireland and Mrs. Rankin.
On Sunday members attended the showing of
the film "The Lawyers".
INCOME TAX. ASSESSMENT ON
"COSTS EARNED" BASIS
A committee of the Council in the course of
dealing with a query from a member relating to
assessment of his profits under schedule E con
sidered the general question of the assessments of a
solicitor's profits on a "costs earned" or "costs
furnished" basis as opposed to a "costs received"
basis. On an assessment under the last mentioned
basis, as is suggested by the term, a solicitor is
assessed for the year on the actual profit costs
received by him during the year regardless of when
earned. On a " costs furnished " basis for assess
ment the solicitor is assessed on the total profit
figure for the bills of costs furnished by him during
the year of assessment. On a " costs earned " basis
of assessment the figure for costs furnished for the
year is taken and on to this is added the figure for
costs earned but in respect of which no bill has been
furnished up to the end of the year and there is
deducted from the total so obtained the figure for
costs earned but in respect of which no bill was
furnished at the beginning of the year. The three
bases of assessment might be illustrated as follows:—
1. Costs received (say 1962 accounting year)
Costs earned and paid in the year
...
5 ,000
Costs received on bills furnished in
the previous or earlier years
...
500
Total
...
£5,500
2. Costs furnished (say 1962 accounting year)
Total costs (excluding outlay) on bills
furnished
in
the year
(although
relating to 1962 and the previous
year or years)
...
...
...
6,000
3. Costs earned (say 1962 accounting year)
£
Costs furnished during the year
...
6,000
Add:
(a)
estimated costs earned in 1962
on cases
completed but un
furnished...
...
...
...
1,000
Add:
(&)
estimated costs earned on cases
current at the end of the year
...
2,000
£9,000
Deduct :
(a)
and
(b)
provided at the end of
the 1961 accounting year
...
4,000
Returned for assessment 1962
£5,000
and this is the way the Costs Account would appear
in the books of the imaginary person concerned :—
Costs Account
1961
To Balance
...
...
£4,000
1962
By Costs received
...
£5>5°°
To Transfer to the credit of
Clients
...
...
5,500
By Costs
furnished
and
charged to Clients
...
By Balance
To Revenue Account:
Costs earned ...
6,000
3,000
5,000
1962 To Balance
£14,500 £14,500
£3,000
and if we assume the office expenses, such as Salaries,
Telephone, Stationery, Rent, etc., at £3,500 we find
that the Net Profit Costs would be :—
Costs received basis
...
£2,000
„
Furnished basis
...
2,500
,,
Earned basis ...
...
1,500
The committee had before them also the recent
English decision of Wetton Page & Co.
v.
Attwooll
(1963 i All England Reports, page 166) from which
it appears that the Inspector of Taxes can elect upon